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ERP Implementation Failure Case Study Analysis

by Suleman

Case Critique: ERP Implementation Gone Wrong: The Case of Natural Springs

            It is important to analyze why companies want to adopt an ERP system. These systems are implemented so that companies can achieve some proper and efficient working in their processes. But the real thing is to understand what kind of system is needed and how it should be implemented to mark the long term success. The organizations fail to successfully implement an ERP system because they don’t correctly review the ERP system’s business and relevant requirements. If an organization does not know its needs to implement an ERP system, it will be less likely to succeed.

Moreover, every stakeholder should be on the same page to adopt the ERP system without any issues (Wieder, Booth, Matolcsy, & Ossimitz, 2006). This is what the case with Natural Springs was that first; they did not understand their requirements. Moreover, the CEO, CFO and COO were not on the same page, which was extremely important because if top management is not on the same page, it has a harmful effect overall.

            The company’s CFO suggested that they should adopt an ERP system so that processes can be improved. There were several reasons to say why Natural Springs needed an ERP system. The first reason was the manual records. The company was keeping its factory as well as office records on the manual method. And it is a fact that when documents are maintained manually, they are more likely to produce delays and errors. Secondly, the current communication method between the factory and the office was not a swift one. So, they needed an ERP system, allowing them to communicate efficiently between the office and the factory.

Moreover, the benefit of the ERP system is that it helps in streamlining the internal controls. The company was looking to get an IPO, and for this purpose, they have to deliver financial reports with accuracy, and it can only be achieved through a proper ERP system. So, these were some of the justifications for Natural Springs to implement an ERP system for their bottled still water business (Krotov, Boukhonine, & Ives, 2011)

            Keeping the above facts in view, it looks quite promising that Natural Springs was on the right track as they were able to identify an ERP system’s needs. Once the company has identified its needs, it can plan out its requirements to implement the ERP system. The things were on track, and a proper tested Sun Systems was chosen to implement in the office and factory. But still, everything went wrong, and Natural Springs was failed to adopt a comprehensive ERP system for better-managed business processes and internal controls. CFO was the one who suggested the ERP system implementation, so the outcome was problematic for him. They identified everything quite well, and everything was looking good until ERP was implemented, then what went wrong. One of the reasons was the unwillingness of the COO to cooperate in the whole process, which failed the entire attempt for the company (Krotov, Boukhonine, & Ives, 2011)

            It is essential to understand from the research data what challenges can be when the ERP for the first time, a framework is being introduced. The first significant challenge is the selection process. It means that the company needs to identify where they want to implement the ERP system and its strategy. Natural Springs looked good in this first phase. The second challenge for a company is to deal with some technical issues. The ERP system needs to be operated by experts to deal with all the technicalities of the system. The third major challenge that a company can face issues with the quality of data. If data records were maintained manually, it would have lots of errors, making it difficult to transfer data to the ERP system. The fourth major issue for a company is to change its business’s overall strategy to align with the new ERP system. This was lacked by Natural Springs that could not change their business dynamics to adjust to the ERP system. The last but not least challenge in ERP implementation is a mind shift. If employees, as well as stakeholders, are not able to shift their minds to this new change, then things will remain challenging, as it proved in this case that the COO could not accept this system by changing his mind (Osintsev, 2016)

            After looking at some of the critical facts from market research and reviewing the case of Natural Springs, it can be said that when proper planning is not done to align the ERP system with the organization, then things will always remain gloomy. Natural Springs could not understand their actual need and how they can keep all stakeholders involved in implementing the ERP system. But Natural Springs failed in doing so, and things went out of control at the end, which yielded their ERP system. This case is a lesson for other companies to ensure that everyone involved in the process is ready to shift his mind and positively implement the new ERP system. 

  • Krotov, V., Boukhonine, S., & Ives, B. (2011). ERP Implementation Gone Wrong: The Case of Natural Springs. Communications of the Association for Information Systems, 28 (18), 277-282.
  • Osintsev, A. (2016). The 5 Biggest Challenges When Implementing ERP for the First Time. Retrieved July 30, 2018, from https://www3.technologyevaluation.com/research/article/the-5-biggest-challenges-when-implementing-erp-for-the-first-time.html
  • Wieder, B., Booth, P., Matolcsy, Z. P., & Ossimitz, M. L. (2006). The impact of ERP systems on firm and business process performance. Journal of Enterprise Information Management, 1, 13-29.

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